Hongkong Land Posts $458M Underlying Profit as Smith Calls 2025 ‘Landmark Year’

Hongkong Land reported a full-year underlying profit of $458 million, down 8 percent from a year earlier, even as the Jardine Matheson-controlled developer declared 2025 a turning point in its transformation into an Asia-focused real estate investment manager.

The decline was driven by a further 7 percent drop in average rents across the group’s Central office portfolio in Hong Kong, where leasing rates slid to HK$94 ($12.02) per square foot for the year.

On a reported basis, however, the group swung to a net profit of $1.3 billion from a loss of $1.4 billion in 2024, after an $890 million net gain on investment property revaluations reversed last year’s deep writedowns.

“2025 was a landmark year for Hongkong Land,” CEO Michael Smith said Thursday in the results announcement. “The group’s financial position remains strong and is well positioned to take advantage of potential new investment opportunities in selected Asia gateway cities.”

Capital Recycling at 90%

Cumulative net proceeds of $3.6 billion had been announced or completed by the end of February, representing 90 percent of the group’s target to recycle at least $4 billion by the end of 2027, Hongkong Land said.

The centrepiece transaction was the formation of the Singapore Central Private Real Estate Fund, or SCPREF, seeded with prime commercial assets in the Marina Bay and Raffles districts, including equity interests in One Raffles Quay and Marina Bay Financial Centre Towers 1 and 2.

The fund closed in February with $6.4 billion in assets under management, with the Qatar Investment Authority and APG Asset Management as founding investors.

Proceeds also flowed from the sale of selected floors at One Exchange Square — the home of the Hong Kong Stock Exchange — for $810 million, and from divesting Southeast Asian developer MCL Land to Malaysia’s Sunway Group for net proceeds of over $650 million.

Net debt fell 30 percent to $3.58 billion as a result of the disposals, with the group deploying more than $330 million of recycled capital into share buybacks since April 2025, reducing shares in issue by 2.4 percent, the company said.

The full-year dividend rose 9 percent to $0.25 per share.

Mainland Writedowns Continue

The group took a further $371 million in post-tax non-cash provisions on its residential inventory in mainland China, where deteriorating market conditions have pushed projected selling prices below development cost — a similar charge to the $314 million recognised in 2024.

The build-to-sell segment, which the group is winding down entirely as part of its October 2024 pivot to a fund manager model, has been reclassified as a non-trading item. Excluding provisions, contributions from the segment fell 44 percent to $127 million.

A restructuring of the mainland residential operation is expected to produce annual savings of $50 million by 2028, Hongkong Land said.

Cautious on 2026

Smith said the group expects 2026 underlying profits to remain broadly unchanged from 2025, with Hong Kong office rental reversions still negative, though narrowing, and the ongoing Tomorrow’s Central luxury retail renovation at Landmark continuing to weigh on income.

New Prada and Saint Laurent flagship stores opened at Landmark late in the year — the Prada boutique being the brand’s largest in Asia Pacific — with more Maison openings expected through 2026.

The group’s total assets under management reached $50 billion at the end of February, up from $40 billion when Strategic Vision 2035 was announced, driven by the SCPREF launch and higher investment property valuations, the company said. Smith is set to discuss the group’s strategy for the region at the Mingtiandi Singapore Forum on 12 May.